Some steel mills implement the third round of price increase

According to China's coal resources network on June 26, some steel mills in Shandong, Hebei, Shanxi and other regions began to gradually implement the third round of price increase of coke, with a cumulative increase of 150 CNY/ton. Due to the accelerated process of coking capacity removal in Shandong Province, the number of enterprises that have stopped production and exited increased. In addition, due to the impact of haze warning weather on environmental protection in Shanxi, Henan, Hebei, Shaanxi and other regions, the operating rate of coking enterprises has declined, and coking enterprises take this opportunity to raise the coke price by 50 CNY/ton in the third round. According to Mysteel's survey data, last week, the capacity utilization rate of 100 independent coking enterprises with sample capacity of more than 2 million tons was 83.23%, with a decrease of 0.97% in the weekly to environmental ratio; the capacity utilization rate of coking plants with capacity of 1-2 million tons was 68.55%, with a rise of 1.2% in the weekly to environmental ratio; the capacity utilization rate of coking plants with capacity of less than 1 million tons was 63.21%, with a decrease of 2.65% in the weekly to environmental ratio.

In terms of coking plant, although due to the problem of environmental protection and limited production in winter, the coking plant has also been affected. However, this year, there are relatively few restrictions on the manufacturers meeting the environmental protection requirements, and the production restriction is mainly concentrated in small and medium-sized coking plants, which has limited impact on the large-scale coking plants with environmental protection rectification in place. The coking capacity of large-scale coking plants with capacity of more than 2 million tons will not decrease but increase at the end of the year, and the subsequent production will have a relatively large impact on the inventory. At present, the coke inventory of coke enterprises in the main producing area is mostly kept low, and the order is sufficient and the shipment is smooth. Last week, the coke inventory of 100 independent coking plants in China dropped for five weeks and recovered. The coke inventory of sample independent coking plants was 499000 tons, an increase of 40700 tons compared with the previous week. Among them, the coke inventory of coking plant with a capacity of more than 2 million tons increased by 28600 tons to 35.38 tons compared with last week; the coke inventory of coking plant with a capacity of 1-2 million tons increased by 0.5-7.05 compared with the previous week, and the coke inventory of coking plant with a capacity of less than 1 million tons increased by 5100 tons compared with the previous week to 47100 tons. After several weeks of destocking, last week's inventory returned to a recovery state, mainly due to the third round of price increase of coke, and the market's low acceptance of the high level of coke.

The rebound in inventory will further put pressure on the price of the disk in the later period. In terms of steel plants, the demand is relatively stable, and most of them purchase on demand. Some steel plants are more active in replenishment, and most of them hold a wait-and-see attitude towards this round of increase. In the continuous game of coke and steel, it is expected that the short-term spot price of Coke will be stable and stronger. Last week, the operating rate of blast furnace in sample steel plant was 65.75%, with a 0.98% increase in the weekly to ring ratio. The operating rate of blast furnace in the same period last year was 65.06%, with a year-on-year increase of 1.06%; the operating rate of sample steel plant generally maintained a stable state, and the adverse impact of production restriction on the operating rate at the end of the year slowed down, with a smaller impact than that of the same period last year. Last week, the sample coke inventory of 110 steel plants in China was 4.7253 million tons, a decrease of 29800 tons on a month on month basis, down 0.63%; the average available days were 15.6 days, unchanged from the previous week. The sample steel plants are now in the stage of digestion and inventory after a round of replenishment of coke coal coke in early December. The price of coke has been adjusted for the third round. Under the current situation, the enthusiasm of steel plant's replenishment procurement is not high, and the overall procurement is still on demand. In the later stage, with the end of 2019 approaching, Shandong's capacity reduction task will be basically completed, and the speculation may come to an end; at the same time, with the release of environmental protection early warning, the supply side is expected to recover.

However, the coke inventory of the steel plant is still at the middle and high level, and there is no significant increase in the willingness to replenish the stock. Judging from the current steel production and profit, the demand expansion space is limited; and the inventory of finished materials in the downstream begins to accumulate, and some steel plants have also appeared the behavior of suppressing the coke price, raising and reducing the coke price by 50 CNY/ton. In addition, due to the high price of coke at present, which limits the enthusiasm of steel mills for replenishment, the actual transaction situation in the market is not hot. In addition, with the coming of 2020, the customs clearance of imported coal will be opened soon, the low-cost and high-quality imported coking coal will further impact the domestic coking coal market, and the coking coal price will fall into a difficult situation, which will also play an important role in the cost reduction of coke. Therefore, it is expected that after three rounds of increase, there is limited space for further increase of coke price.